That fiscal cliff? Dow Chemical says China's a bigger worry

NEW YORK, Dec 3 (Reuters) - Many executives say they're
anxious about the U.S. fiscal cliff negotiations, but Dow
Chemical Co's chief executive says he's more bothered by
the messy Chinese leadership transition, which he believes is
wreaking greater harm on global markets.

"Markets have, in a holistic sense, really been suffering
more from China's slowdown than any slowdown here in the United
States," Andrew Liveris said during the company's investor day
in New York on Monday.

China, Dow Chemical's second-largest market by sales,
unveiled its new leaders in November after months of speculation
about who would assume top roles, as well as controversy about
widespread corruption among government officials and the cooling
growth of the country's economy.

The leadership transition has been "very uncomfortable" for
the Chinese and has "created a disruption to their supply chains
and created a pause" in economic growth rates, Liveris said.

"We'd been used to double-digit growth rates in plastics now
in China now for the better part of a decade, and now that's
slowed to stopped in this last six months."

Dow has about 2,000 employees and more than seven
manufacturing sites in China. The company doesn't break out
specific sales numbers by country, but the Asia Pacific region
posted sales of $10.55 billion in 2011, roughly a sixth of total
revenue.

Dow Chemical has seen sales of packaging and other consumer
products begin to improve in China in recent weeks, but for 2013
the company expects Chinese GDP growth of only 6 percent to 7
percent, "which is way lower than it normally is," Liveris said.

"We're not planning on any big bounce back (in China),
because inventories are staying low," he said. "But there is the
beginning of a return to buying power."

BELIEVES FISCAL CLIFF DEAL POSSIBLE

The United States has been a "bright spot" in the past four
months because cheap natural gas from fracking helps Dow
Chemical sell American-made plastics and other products to other
countries, Liveris said.

U.S. companies, including Dow Chemical, have become
conservative with cash out of concern U.S. politicians won't
reach a deal on the so-called "fiscal cliff," a combination of
government spending cuts and tax increases due to be implemented
under existing law in early 2013 that could tip the U.S. economy
back into recession.

U.S. politicians have been fighting over a deal, and that
uncertainty creates a "haze, which needs to be dismissed as fast
as possible," said Liveris, who sits on U.S. President Barack
Obama's advanced manufacturing partnership committee.

"We are optimistic that we won't go off the cliff," he said.
"We remain convinced that there will be a solution that will
help appease markets."

ASSET SALES

Liveris has been trying to bolster sales amid the economic
uncertainty and cut the company's $20.4 billion debt load.

Earlier this fall Liveris said he would close 20 plants and
cut 5 percent of Dow Chemical's workforce to offset the slowing
global economy. Liveris also slashed the company's research and
development spending.

Liveris had warned at the time he might sell additional
assets, and on Monday he confirmed that in the next 12 months he
would also sell $1 billion of Dow Chemical assets that currently
bring in roughly $1 billion in annual revenue.

Liveris declined to say which assets he will sell, but said
it makes more sense for Dow Chemical to invest its money in
growth projects, like its Enlist agricultural chemical, rather
than slow-growth areas.

"Companies our size, we don't want to cut into muscle and
bone," Liveris said. "But in this new world order if you take
the view that we've taken that the world is slow and going
through massive uncertainty, then you are being more
conservative."